OCC Warns Again on IT Concentration Risk
The US Office of the Comptroller of the Currency, which supervises the federal banking system, has warned again of growing IT risks.
"Use of third-party service providers is increasing, and critical operations are increasingly concentrated in a few large service providers," says the OCC in its latest risk perspective review, published ion December 3.
The OCC warned in its previous semi-annual risk perspective that it has seen evidence of increasing IT risk due to the concentration in the vendor marketplace.
Now it is repeating the message, saying: "Risks and any resultant operational events, if not properly managed by the service providers and their clients, could have a systemic impact on the financial services industry."
However, the OCC also states that: "While the reliance on third-party service providers is increasing, the control systems at these service providers are generally effective."
The says: "Effective due diligence is essential for banks to improve the management of risks associated with the (1) use of third-party service providers for critical services, (2) increasing interdependencies and interconnectivity, and (3) implementation of new products and services offered through emerging firms that leverage innovative technologies and delivery channels."